Question

The future value of a certain money market account with a fixed interest rate of

3.65% compounded monthly grows according to the compound interest formula. If
we were to contribute $5,000 into the account today, what would the future value
of the investment be in 15 years?
O $5,233.41
O $5,185.85
$7,743.90
son
O $8,637.45

Answer 1

D = $8637.45

Explanation:

Rate = 3.65% = 0.0365

Principal = 5000

Time (t) = 15 years

N = 12 (since its compounded monthly)

Compound interest (A) = P(1 + r/n)^nt

A = 5000(1 + 0.0365 / 12)^15*12

A = 5000(1 + 0.00304)¹⁸⁰

A = 5000(1.00304)¹⁸⁰

A = 5000 * 1.7269

A = 8634.86

The investment would worth $8634.86

Note: the final answer may vary slightly from the answer in the options due to ± from approximation